The International Investment Effect And Industry Location Effect Of Trans-pacific Partnership Agreement

In recent years, regional economic integration, in particular the regional trade agreements has developed rapidly, more and more countries consider it is equally important as the multilateral trade and even more important. In the hegemony in the world of America is no exception, the trans-Pacific Partnership Agreement is becoming it leading Asia Pacific affairs of the main carrier. Compared with the traditional regional trade agreements, TPP pay more attention to the field of investment. When the negotiations of TPP reached, it will enable the members to reduce intra-regional trade and investment restrictions, therefore, the establishment of TPP has the investment effect of promoting the region national FDI inflows.20 Centuries 90 time, the new economic geography took imperfect competition and scale economy effect into account, which on the micro level researched enterprises’ production location, agglomeration and evolution, and recommend new tools and methods for research international investment and industrial location transfer effect of the regional economic integration between countries. Therefore, in this paper we use the method of the multinational non asymmetric footloose capital model of the new economic geography to analyze the theory mechanism and influencing factors of the effect of international investment and industrial regional transfer, which generated by regional economic integration, then we take TPP as an example, analysis and test its direct investment and industry location effect, finally, we points out the coping strategies of China. The part of theoretical analysis, this paper on the basis of expand Multilateral asymmetric footloose capital model analyze the theoretical mechanism and influencing factors of the effect of regional integration investment, then we obtain four corollaries:Corollary 1: Regional economic integration will produce the effect of investment diversion around the region, it will cause the layout of the regional investment rebalanced, namely, the international direct investment of a member country increase, which will lead to the international direct investment of another member is reduced, then resulting in the effect of regional investment diversion. The scale of investment diversion effect depends on the size of each member country’s trade openness, industrial goods expenditure share and consumer diversity preferences.Corollary 2: Regional economic integration will produce the effect of regional investment diversion from exterior region to interior region, it is by decreasing the direct investment of the countries from outside, then increasing the direct investment of the members of regional integration, finally resulting the investment diversion effect around the world. The size of this kind of investment diversion effect depends on the scale of free trade and trade openness.Corollary 3: Regional economic integration makes the capital, skilled labor, professional and technical personnel and technology to free flow between members, the controls and restrictions on investment flows and investment projects running between members were dismantled, these factors will contribute to increase mutual investment between members, namely producing Investment creation effect around the region.Corollary 4: Regional economic integration will expand the market scale of members, the production enterprises within the region will obtain higher profits because of scale economy effect, multinational enterprises outside the region will speed up the establishment of production bases in the region thanks to being attracted by a unified big market and further expand its market share, at the end resulting in increase the investment from outer region to inside region, namely producing investment creation effect between regions.In the part of empirical study, we mainly analysis of the effect of direct investment and industry location produced by TPP on the members and other non-menber nations including China. In descriptive statistics analysis, the time series data statistical analysis based on national and regional levels suggested TPP can generated international investment and industry location effect, analysis of the competition and complementary of trade and investment between countries can also reflect this point, this is consistent with the four corollaries from the theory part. The empirical part by analyzing the investment data of 29 countries including 12 TPP members and 17 non-members of TPP from 2002 to 2013, we found that TPP’s FDI effect is significant, which can promote the members FDI inflows from the investment creation effect and transfer effect, and this effect is correlative with the member country’s initial conditions, industrialization level, number of product categories and the freedom of trade.According to these theoretical and empirical results, this paper putted forward the following Suggestions. Firstly, making full use of the positive benefits of regional integration, and actively develop the geo-economic strategy according to their situation; Second, to accelerate the transformation and upgrading of domestic industrial structure and formation the industrial structure which complement with emerging economy members of the TPP; Third, promote the process of industrialization, freer trade and encourage enterprises to widen the diversity of products, and then to improve its resource endowment conditions, finally promote FDI inflows.